EMERGING MARKETS-EM stocks edge higher as investors juggle Fed hopes with Ukraine risks

Markets also heaved a sigh of relief after a slew of U.S. economic data on Wednesday kept expectations for a Fed rate cut elevated. Elsewhere, Saudi Arabian stocks gained 1.1%, helped by firmer oil prices after Ukrainian attacks on Russia's oil infrastructure signalled potential supply constraints, and stalled peace talks tempered expectations of a deal restoring Russian oil flows to global markets.

Emerging market stocks rose on Thursday, drawing cautious interest as investors assessed shifting global risk appetite and a flurry of Ukraine-related developments.

The MSCI index of emerging market equities was up 0.2% and the corresponding currencies gauge was little changed. While December is typically a quieter month, geopolitical turbulence has kept investors on tenterhooks. Markets have pinned their hopes on the Federal Reserve to support momentum by lowering interest rates, but the absence of a breakthrough in efforts to end the Russia-Ukraine war has capped gains.

Ukraine's dollar-denominated bonds were steady on Thursday. The country has hit the Druzhba oil pipeline in Russia's central Tambov region, a source in Ukraine's GUR military intelligence said on Wednesday. Talks between Russian President Vladimir Putin and U.S. envoys concluded without significant progress.

EUROPE EDGES HIGHER, SAUDI ARABIA GAINS ON OIL Most European markets recovered, with Hungary's Budapest SE index gaining 0.5% and Polish equities up 0.6%.

The Czech crown was down 0.4% against the euro, and the Polish zloty fell 0.1%. Poland's central bank cut its main interest rate by another 25 basis points on Wednesday, its sixth reduction this year. Markets also heaved a sigh of relief after a slew of U.S. economic data on Wednesday kept expectations for a Fed rate cut elevated.

Elsewhere, Saudi Arabian stocks gained 1.1%, helped by firmer oil prices after Ukrainian attacks on Russia's oil infrastructure signalled potential supply constraints, and stalled peace talks tempered expectations of a deal restoring Russian oil flows to global markets. Despite claims of talks being constructive, "the issue of territory will be tough to resolve", economists at ING wrote in a note.

In China, the blue-chip CSI300 index was up 0.3%. The country is likely to stick to its current annual economic growth target of around 5% next year, government advisers and analysts said. Hong Kong's benchmark Hang Seng index was up 0.7%.

Analysts argue that the backdrop remains favourable for emerging market assets despite near-term headwinds. "The current macroeconomic environment supports an overweight allocation to non-U.S. assets," said Brian Levitt, chief global market strategist at Invesco.

He pointed out that regional equities are better positioned to capitalize on the surge in AI enthusiasm, with valuations generally more benign than in the U.S. Local currency debt could also benefit from a weaker dollar if U.S. rates are cut and inflation pressures continue to ease.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)